Rossi, a self-made millionaire, is one of the few people who actually understand the state budgeting process and exactly how it works — at all levels. He chaired the Senate Ways and Means Committee in 2003 when the Republicans held the state Senate. A self-admitted movie buff, Rossi used his easy speaking style to humorously compare what’s been going on in Olympia to various movies. As Ways and Means Chair, he produced a $23 billion no new tax budget during the biggest dollar deficit in state history. He called that “Mission Impossible.”

Taxpayers forked over a “Fistful of Dollars’’ in 2005 when the state spent a record increase, and another $4 billion in increased spending was dubbed “The Money Pit.” While the governor put out a supplemental budget in 2006, the Senate’s was higher than hers and the subsequent House supplemental even higher. Rossi explained that this was followed by a conference committee budget even higher than all of the previous three. He called that, “For a Few Dollars More.”

Then he got serious, saying that state spending must reflect the economic realities we face. He warned that in today’s global economy, jobs and money can be moved instantly, and that in such an environment, if state tax levels or regulatory costs that become too high, businesses can easily re-locate to more tax-friendly states — robbing Washington residents of job opportunities, and cost the state tax revenues.

He also talked about how former Governor Gary Locke established a Priorities of Government (POG) agenda that identified program priorities, and balanced all requests for funding of new programs against those priorities. He then illustrated how the current Democratic-controlled legislature has abandoned that program, and with the help of Governor Christine Gregoire, been on an unsustainable spending spree since 2005.

The budget for the 2005-07 biennium includes new taxes, increased spending, and is rife with budget “gimmicks” to balance it. Among the specific points Rossi made were:

At a time when the state was in a fragile economic recovery, spending increased by 17.4 percent — or around $4 billion. This is the largest spending increase in state history.

There were $1.1 billion in spending additions, with only $252 million in reductions and efficiencies. This means hundreds of millions of dollars for future budget obligations were added at a time when the state cannot fully fund its current obligations. He cited the state pension system, a growing liability that could cost taxpayers billions of dollars in the future if it continues to be underfunded — and that this responsibility continues to be ignored.

Current and future economic realities are also being ignored. One example he cited is how the housing market is cooling off, which also reduces state revenues. Rossi noted that if the state continues to make budgeting decisions based on what it forecasts as opposed to actual revenue, it will face billion-dollar shortfalls every budget cycle.

A dangerously small amount is left in reserves — just $238 million — less than one percent of the state budget. And while some people argue this amount was higher, the reality is they cannot spend a dollar and at the same time they claim to save it. A true emergency reserve fund is money set aside specifically for a rainy day or disasters.

New state accounts have been created, specifically to give political cover for creative accounting and protecting the ability of legislators to spend more in the future.

Rossi finished up by saying that the bottom line on the 2005-07 state operating budget is that it is not fiscally sound, is unsustainable at the levels the legislature and governor continue to spend, and that a economic downturn could result in larger deficits than ever before — in spite of beginning with a surplus of almost $2 billion. He added that the principles on which the budget is based jeopardize our state’s future.

When he was finished, Rossi received a standing ovation from the crown of primarily businesspeople. He took questions from the audience, signed copies of his book, Lessons in Leadership, Business, Politics and Life, and posed for pictures with community members.

But the message was clear: We can’t continue to spend at the level we are, and have a sound economy over the, long term. The numbers just don’t add up.